Meritage Homes Corporation (Meritage Homes) is a designer and builder of single-family attached and detached homes.
The company primarily builds in historically high-growth regions of the United States and offers a variety of entry-level and first move-up homes. The company has operations in three regions: West, Central and East, which are consisted of twelve states: Arizona, California, Colorado, Utah, Texas, Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina, and Tennessee...
Meritage Homes Corporation (Meritage Homes) is a designer and builder of single-family attached and detached homes.
The company primarily builds in historically high-growth regions of the United States and offers a variety of entry-level and first move-up homes. The company has operations in three regions: West, Central and East, which are consisted of twelve states: Arizona, California, Colorado, Utah, Texas, Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina, and Tennessee. These three regions are its principal homebuilding reporting segments. The company also operates a financial services reporting segment. In this segment, it offers title and escrow, mortgage, and insurance services.
Carefree Title Agency, Inc. (Carefree Title), the company’s wholly owned title company, provides title insurance and closing/settlement services to its homebuyers in certain states. Managing its own title operations allows the company greater control over the entire escrow and closing cycles in addition to generating additional revenue.
Meritage Homes Insurance Agency, Inc. (Meritage Insurance), the company’s wholly owned insurance broker, works in collaboration with insurance companies nationwide to offer homeowners insurance and other insurance products to its homebuyers. The company’s financial services operations also provide mortgage services to its homebuyers through an unconsolidated joint venture.
The company’s homebuilding activities are conducted under the name of Meritage Homes in each of its homebuilding markets. At December 31, 2024, the company was actively selling homes in 292 communities.
Strategy
All facets of Meritage's operations are governed by the core values that define the company’s culture and operational parameters, ensuring that its actions are aligned around its brand promise of delivering to each of the company’s customers a LIFE.BUILT.BETTER.
The company’s six core values include: Start With Heart, Integrity Above All Else, Develop to Empower, Think Strategically, Build Value, and Play to Win. These values combine its entrepreneurial spirit and organizational agility to strive for industry-leading results in all of the company’s functional areas, including: land acquisition and development, finance, marketing, sales, purchasing, construction, customer care, and information technology. The main tenets of these core values are:
Value, recognize and appreciate the company’s employees, trade partners and customers;
Act with honesty, character and integrity by demonstrating openness and transparency with the company’s internal and external customers;
Provide the highest level of customer service by bringing passion and care to every interaction and make a difference by giving back to the communities the company serve;
Strive to have the best team available through investing in the company’s people and fostering an environment that embraces growth and learning;
Renew, rethink and innovate, continuously and purposefully, with the customer in mind, by supporting and encouraging new ideas and recognizing efforts that grow stakeholder value;
Lead with action, be relentless in the company’s pursuit of excellence and never settle; and
Commit to build a culture of inclusion and belonging across the company’s organization.
These core values are evident in the operational decisions, all of which contribute to the successes the company have achieved in becoming the fifth largest homebuilder in America.
The company’s operational strategy focuses on building affordable, move-in ready homes that are designed to meet the growing demand for entry-level and first move-up product. The company’s LiVE.NOW communities are targeted to the entry-level price point combining nicely appointed affordable homes with simplified and streamlined construction and sales processes aimed to create a stress-free buying experience for its customers while also allowing its trade partners and suppliers to work more efficiently, which allows the company to pass resulting savings on to its customers.
The company has a 100% speculative (spec) home building strategy for its entry-level product, so the company pre-starts all its homes with preselected plans and features. The company introduced a strategic shift of selling homes later in the construction process which enables it to compete more effectively with the resale home market by shortening the delivery time from sale to close, aligning more closely with typical resale home closing timelines. The company’s strategic shift focuses on three core tenets: a 60-day closing ready guarantee beginning in 2025, move-in ready homes, and external realtor engagement.
The company continues to focus on building energy efficient, resilient homes and it is one of the core differentiators between the new and resale home market. Accordingly, at a minimum, every new home the company constructs meet or exceeds ENERGY STAR standards, which are higher than existing building codes. These standard offerings provide the company’s customers with homes that utilize, on average, half of the energy of a typical U.S. home of the same size. As a result of the company’s commitment to interior air quality, the company received the U.S. Environmental Protection Agency’s (EPA) ENERGY STAR certification for the eleventh time in 2024 and the Indoor airPLUS certification for the fourth consecutive year. The company’s commitment to incorporate these energy and healthy living standards into all its homes has resulted in the company’s achievement of design, purchasing and production efficiencies that have allows it to offer these as standard features to the company’s home buyers for nominal additional cost while providing significant additional value to its customers. In addition, all homes the company builds include home automation features through its M.Connected Home Automation Suite which includes a central hub that allows users to monitor and control key components of their homes, such as Wi-Fi enabled thermostats, garage doors and smart door locks.
Land Acquisition and Development
The company’s current land pipeline goal is to maintain an approximate four-to-five-year future sales order pace supply of lots, which it believes provides an appropriate planning horizon to address regulatory matters, perform land development and manage to the company’s business plan for future closings. With the increasing demand for new homes, and in the support of its commitment to grow community count and market share. During the year ended December 31, 2024, the company secured approximately 37,000 net new lots, up from 16,000 net new lots in 2023. Included in the 2024 new lots are those the company acquired as part of its entry into new markets in Alabama and the Gulf Coast. The company ended the year with 85,613 lots under control on December 31, 2024, versus 64,313 in 2023. Nearly all the lots placed under control in 2024 are designated for entry-level communities. The company is focused on growing its market share in its newly entered and existing markets, and the company continually evaluates its markets, monitoring and adjusting the company’s lot supply through lot and land acquisitions to ensure the company has a sufficient pipeline that is in sync with local market dynamics, as well as the company goals for growth in those markets. During 2024, the company closed 15,611 homes, purchased approximately 27,300, and started construction on 15,824 homes. At December 31, 2024, approximately 62% of the company’s controlled lots were owned.
The company is purchasing primarily undeveloped land as the opportunity to purchase partially developed or substantially finished lots in desired locations is limited. Finished lots are those on which the development has been completed by a third party and are ready for immediate home construction. The entitlement and development of raw and undeveloped land and partially developed lots require a longer lead time before new communities can open for sales. Typically, undeveloped and partially developed lots will have a lower all-in cost than finished lots as the company is responsible for improvements on the land, rather than paying a mark-up on improvements completed by a third-party developer. When evaluating any land acquisition opportunity, its selection is based upon a variety of factors, including:
financial feasibility of the proposed project, including projected profit margins, total capital commitment, return on capital invested, and the capital payback period;
suitability of the land for the company’s product offering of entry-level and first move-up homes;
management’s judgment as to the local real estate market and economic trends, and the company’s experience in particular markets;
environmental impact and sustainability considerations;
existing concentration of lots owned and controlled by Meritage and other builders and developers in surrounding markets;
development timeline, generally a three to five-year period from the purchase of the underlying property to the delivery of the last home;
demographic data from the surrounding area based on extensive market studies, including surveys of both new and resale homebuyers;
the ability to secure governmental approvals and entitlements, if required, and any associated risks;
results of technical, environmental and legal due diligence;
proximity to schools, local traffic and employment corridors, goods and services, and amenities;
assessment of development risks, complexities and timelines; and
availability and financial impact of seller-provided purchase options or structured financing agreements that allow the company to defer lot purchases until needed for production, if applicable.
The company generally purchases and develops parcels that provide it with communities that range on average from 100 to 200 lots per product line.
Once the company secures undeveloped land, it generally supervises and controls the development of the land through contractual agreements with professional consultants and subcontractors. These activities may include site planning and engineering, as well as constructing road, sewer, water, utilities, drainage, landscaping improvements, recreation amenities, and other improvements and refinements. The company develops a design and marketing plan tailored to each community, which includes the determination of type, size, style and price range of homes. The company may also determine the overall community design for each project it develop, including street and community layout, individual lot size and layout, and common areas and amenities to be included within the community. The homes offered depend upon many factors, including the guidelines, if any, of the existing community, housing available in the area, the needs and desired housing product for a particular market based on consumer research, and pricing targets for the desired product offering in the surrounding area, though the company almost exclusively use its standardized home design plans in its communities. The company also builds homes in master-planned communities with home sites that are adjacent to or near major amenities, such as golf courses or recreation facilities.
As of December 31, 2024, in addition to the company’s 53,335 owned lots, the company also had 32,278 lots under committed purchase or option contracts. The company purchases and develops land primarily to support the company’s homebuilding operations, although it may sell land and lots to other developers and homebuilders from time to time where the company has excess land positions or for other strategic reasons.
Construction Operations
The company typically acts as the general contractor for its projects and hire experienced subcontractors on a geographic basis to complete construction. The company usually enters into agreements with subcontractors and materials suppliers after receiving competitive bids. The company also enters longer-term and national or regional contracts with subcontractors and suppliers, where possible, to obtain more favorable terms, minimize construction costs and to control product consistency and availability. In addition to contractually requiring that its subcontractors comply with all laws and labor practices pertaining to their work, subcontractors must also adhere to the company’s Code of Ethics and Vendor Code of Conduct, follow local building codes and permits, and meet performance, warranty and insurance requirements. See 'Customer Relations, Quality Control and Warranty Programs' below for additional information about the company’s subcontractor requirements. The company’s purchasing and construction managers coordinate and monitor the activities of subcontractors and suppliers, and monitor compliance with zoning, building and safety codes.
The company generally builds and sells homes in phases within its larger projects, which creates efficiencies in land development, home construction operations and cash management. The company also believes it improves customer satisfaction by reducing the number of vacant lots and construction activity surrounding completed and occupied homes. The company’s homes are typically completed within three to five months from the start of construction, depending upon the geographic location and the size and complexity of the home. Construction schedules may vary depending on the size of the home, availability of labor, materials and supplies, product type, location, municipal requirements and weather. The company’s homes are usually designed to promote efficient use of space and materials.
Marketing and Sales
The company has an established reputation for building attractive, high quality energy-efficient, affordable homes, which helps generate demand for its product. The company has robust communication and marketing plans that reach real estate agents and prospective buyers through a combination of online advertising, online listings, social media, email and articles. In mid-2024, the company announced its strategic shift to focus on real estate agents as the primary customer and the company created a variety of tools to help agents leverage a suite of digital offerings to provide a simple and streamlined sales and marketing experience, including:
Immediate lockbox access for models and completed homes;
Industry-leading dedicated Agent Portal where agents can find and save homes, view clients, see loyalty program status and more - all in one place;
Virtual tours in all of the company’s communities;
Extensive online tools such as 3-D tours and dynamic floor plans to mimic the live experience of walking through a model home;
The company’s chat bot, Virtual Assistant Liaison (‘VAL’), provides customers and owners with around-the-clock information and support on its website;
Pre-qualifying buyers for mortgages through digital solutions on the company’s website;
Collecting earnest money payments remotely through third-party hosted money-transfer solutions;
Warranty portal for the company’s homeowners to submit and track warranty-related matters;
Comprehensive online suite of financial services such as on-demand homeowners’ insurance quotes; and
Digital signing of sales contracts and drive-through and partial or fully virtual closings in states where such services are permitted.
The company’s strategic shift to focuses on real estate agents as the primary customer and it created a variety of tools to help agents leverage a suite of digital offerings to provide a simple and streamlined sales and marketing experience, including:
Immediate lockbox access for models and completed homes;
Industry-leading dedicated Agent Portal where agents can find and save homes, view clients, see loyalty program status and more - all in one place;
Virtual tours in all of the company’s communities;
Extensive online tools such as 3-D tours and dynamic floor plans to mimic the live experience of walking through a model home;
The company’s chat bot, Virtual Assistant Liaison (VAL), provides customers and owners with around-the-clock information and support on the company’s website;
Pre-qualifying buyers for mortgages through digital solutions on the company’s website;
Collecting earnest money payments remotely through third-party hosted money-transfer solutions;
Warranty portal for the company’s homeowners to submit and track warranty-related matters;
Comprehensive online suite of financial services such as on-demand homeowners’ insurance quotes; and
Digital signing of sales contracts and drive-through and partial or fully virtual closings in states where such services are permitted.
In addition, the company’s local marketing efforts are focused on online listings and generating leads through digital media campaigns, in-person and virtual events for real estate agents, and grass roots marketing efforts. The company’s marketing strategy is aimed at differentiating Meritage Homes by focusing on real estate agents as its primary customer, supported by the company industry-leading Agents Rock Rewards program, which provides opportunities for real estate agents to grow their business in true partnership with Meritage Homes.
In addition to the company’s robust digital marketing platform, the company also uses furnished model homes as a marketing tool to demonstrate to prospective homebuyers the advantages of the designs and features of its homes. As of December 31, 2024, the company owned 341 completed model homes, had 28 models under construction and leased back one model home previously sold to a buyer. The company generally employs or contracts with interior and landscape designers who enhance the appeal of its model homes, which highlight the features and options available. The company typically build between one and three models for each actively selling community, depending upon the products to be offered and the number of homes to be built in the project. The company strives to implement marketing strategies that will educate its buyers on how the company unique building techniques and the energy efficient and home automation features in the company’s homes differentiate them from other homes.
The company’s strategy of providing simplification and transparency extends to the company’s approach to interior design and finishes, which is particularly appealing to the company’s first-time and first move up buyer segments. The company offer pre-selected combinations of flooring, cabinetry, countertops and fixtures that are all professionally designed to meet the company’s buyer’s preferences, and the company’s homebuyers benefit from bulk-purchase savings that the company pass through from the company’s national vendor partnerships.
The company’s homes generally are sold by its commissioned local sales associate employees. The company’s sales associates are licensed real estate agents where required by law.
Third-party real estate agents also sell the company’s homes and are paid a sales commission, usually based on the price of the home. The company are now more heavily focused on this relationship and have the company’s robust Agents Rock Rewards loyalty program for these agents, demonstrating the company’s commitment to leaning into the external realtor market with the company’s recent strategic shift.
Investments in Unconsolidated Entities — Joint Ventures
The company may enter into joint ventures as a means of accessing larger parcels of land, expanding its market opportunities, managing its risk profile and leveraging the company’s capital. The company has two active land development ventures. In addition to the land development joint ventures, the company also participates in one mortgage business joint venture (MTH Mortgage). The mortgage joint venture is engaged in mortgage activities and primarily provides services to the company’s homebuyers.
Customer Financing
Most of the company’s homebuyers require financing to purchase their home. Accordingly, the company refers them to mortgage lenders that offer a variety of financing options. While the company’s homebuyers may obtain financing from any mortgage provider of their choice, it has a joint venture arrangement with an established mortgage broker that acts as a preferred mortgage broker to help facilitate the financing process, as well as generate additional revenue for the company through its interests in the joint venture. The company also has referral relationships with unaffiliated preferred mortgage lenders.
Seasonality
Historically, the company has experienced seasonal variations in its quarterly operating results and capital requirements. The company typically take orders for more homes in the first half of the fiscal year than in the second half, which has created additional working capital requirements in the second and third quarters to build the company’s inventories to satisfy seasonally higher closings in the second half of the year. While the company expect the seasonal orders pattern to continue over the long term, the company’s higher backlog conversion rate and all-spec strategy may shift the timing of home closings and capital requirements to build the company’s inventories to earlier in the year. Additionally, seasonality may, from time to time, be affected by short-term volatility in the homebuilding industry and in the overall economy.
Government Regulation and Environmental Matters
In order for the company’s homebuyers to finance their home purchases with Federal Housing Administration (‘FHA’)-insured, Veterans Administration (‘VA’)-guaranteed or United States Department of Agriculture (‘USDA’)-guaranteed mortgages, the company is required to build such homes in accordance with the regulatory requirements of those agencies.
History
Meritage Homes Corporation was founded in 1985. The company was incorporated in 1988.
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